Stocks come back from Irish jitters

Hewlett-Packard results cheer Street. Traders get past a nasty sell-off built on fears that an Irish bank rescue plan won't work. The FBI raids three hedge funds in an insider-trading probe.

By Charley Blaine Nov 22, 2010 2:35PM

Charley BlaineUpdated: 9:45 p.m. ET

Stocks rebounded off their lows of the day, but weakness in financial shares kept the Dow Jones industrials ($INDU) and the Standard & Poor's 500 Index ($INX) from recovering on the day.

Strength in technology stocks allowed the Nasdaq Composite Index ($COMPX) to push into positive territory.

Financials were weak because of worries about the European financial system and uncertainty created by what appears to be a broad probe in insider trading.

The Dow closed down just 25 points to 11,179. The S&P 500 was off just 2 points to 1,198. The Nasdaq was up 14 points to 2,532.

After the close, Hewlett-Packard (HPQ) shares were moving higher after the personal-computer giant beat estimates on fiscal-fourth-quarter results and boosted guidance for the first fiscal quarter and the 2011 fiscal year.

HP earned $1.33 a share, up 16.7% from a year-ago's $1.14 and ahead of the Street estimate of $1.27. Revenue was up 8.2% to $33.28 billion and ahead of the consensus estimate of $32.75 billion.

For the first quarter, HP expects revenue of $32.8 billion to $33 billion. That's ahead of the consensus estimate of $32.74 billion.

Shares of the Dow component were up 2.9% to $44.50 after hours. They had closed up 1.8% to $43.25 in regular trading.

 

Due Tuesday are an update on third-quarter economic growth and the National Association of Realtors' October report on existing-home sales. Quarterly results include earnings from Campbell Soup (CPB) and Cracker Barrel Old Country Store (CBRL).

Futures trading suggests stocks are headed to a modestly lower open.

 

Energy prices -- New York close
 

Mon.

Fri.

Month chg.

YTD chg.
Crude oil 

$81.74

$81.98

0.38%

3.00%
(per barrel)











Heating oil

$2.2686

$2.2744

1.38%

7.23%
(per gallon)











Natural gas 

$4.2710

$4.1640

5.77%

-23.35%
(per mil. BTU)











Unleaded gasoline

$2.1519

$2.1960

4.49%

4.82%
(per gallon)











Retail gasoline

$2.8720

$2.8750

2.35%

8.94%
(per gallon; AAA)












An ugly sell-off quickly finds a bottom

A midmorning sell-off had pushed the Dow down as many 149 points and the S&P 500 15 points before a rebound kicked in. Technically oriented traders noted that the buying was set off when the S&P 500 hit 1,184. The index closed around that level consistently between Oct. 18 and Nov. 1.

The sell-off occurred because investors did not appear to be thankful for the one thing they wanted last week: at least a temporary solution to the Irish debt problem.

The Irish government has asked the European Central Bank and the International Monetary Fund for billions of dollars of help to support its ailing banking system.

Tech stocks, especially Apple (AAPL), helped the Nasdaq and helped support Hewlett-Packard.

Apple was up 2.2% to $313.36, contributing more than 9 points to a 16-point gain for the Nasdaq-100 Index ($NDX.X), which tracks the largest Nasdaq stocks. The index closed at 2,151, up 0.7%.

The U.S. dollar rose against the euro, forcing crude oil and copper lower. Crude oil for January delivery settled down 24 cents to $81.74. It had been down to as low as $80.59. Copper settled down 8.2 cents to $3.752 a pound. Gold was up $5.50 to $1,357.80 an ounce.

Interest rates were lower, with the 10-year Treasury yield falling to $2.813% from 2.895% on Friday.

Banks lead the S&P 500 lower
Only seven of the 30 Dow stocks were higher today, led by Hewlett-Packard. Four of the 10 sectors of the S&P 500 were higher, led by consumer discretionary stocks including Best Buy (BBY), up 3% to $44.86.

Also higher: Nordstrom (JWN), Macy's (M) and American Eagle Outfitters (AEO).

Financial and energy stocks were among the worst-performing sectors. The S&P 500 financial sector index was off 1.4% to 197. The S&P 500 Financial Sector exchange-traded fund (XLF) was off 1.4% to $14.64.

Bank of America (BAC) was off 3.1% to $11.30. JPMorgan Chase (JPM) was down 2.3% to $38.51.

Mostly, the declines were due to worries about how the Irish situation might affect banks in other countries. Deutsche Bank (DB), Barclays (BCS), Societe Generale (SCGLY) and other big European financial were all down as well.

Energy shares slumped as oil moved lower. ExxonMobil (XOM) was off 0.5% to $70.19. Diamond Offshore Drilling (DO) fell 2% to $67.53. Schlumberger (SLB) was off slightly to $76.40.

Goldman Sachs slumps on insider-trading probe
Goldman Sachs (GS) was off 3.4% to $161.05 after The Wall Street Journal reported this weekend that the investment house is a focal point a three-year investigation into possible insider-trading networks.

Sources told the Journal that the Securities and Exchange Commission and other federal officials are nearing the end of the probe, which includes determining whether Goldman Sachs bankers divulged information about health care acquisitions and other transactions.

Earlier today, FBI agents raided the Connecticut offices of hedge funds Diamondback Capital Management  and Level Global Investors amid a far-reaching insider-trading investigation, the Journal said.

The hedge funds are run by former managers of Steve Cohen's SAC Capital Advisors.

Level Global Investors is a Greenwich, Conn., hedge-fund firm run by David Ganek, a former SAC Capital trader and art collector. He started Level Global in 2003 and earlier this year reported managing about $4 billion in assets.

Diamondback Capital Management, founded in 2005, is managing $5 billion in assets.

Agents also apparently search the office of a Boston hedge fund, Loch Capital Management.

After an Irish bailout, what next?
The problem is support for Ireland does not equal a long-term solution, and there's unease building that the the long-term solution may prolong the pain of the slow economic recovery.

And the greater fear is that the Irish problem will spread to Portugal and Spain. 

Along with Greece, those three countries saw property values soar, then bust, just as they did in the United States. The Irish government agreed to backstop Irish bank losses. Speculators have been shorting Irish government bonds out of confidence that the government doesn't have the resources to cover the bank losses.

Ireland, once among the hottest European economies, has been in a deep recession and anecdotal evidence is growing that many Irish residents are leaving the country to look for work. Australia is a popular destination.

Stocks making moves
While the market was lower, here are some stocks that made moves today:
  • Cirrus Logic (CRUS), up 14.9% to $15.88. The supplier of parts for Apple’s iPhone and iPad was raised to "buy" from "hold" by Jefferies & Co.
  • Green Mountain Coffee Roasters (GMCR), up 18.2% to $35.78. The seller of Keurig single-cup brewers was raised to "buy" from "underperform" by Bank of America/Merrill Lynch analyst Bryan Spillane because of increased earnings potential and clarity on the SEC's inquiry into the company’s accounting practices.
  • Netflix (NFLX), up 8.8% to $188.32. The mail-order and online movie-rental service introduced its first streaming-only subscription plan in the U.S. for customers to watch movies and TV shows online for $7.99 a month.
  • Novell (NOVL), up 6.6% to $5.96, tops among S&P 500 stocks. Privately held Attachmate said it plans to acquire the network software maker for $6.10 a share. Novell valued the deal at about $2.2 billion.
  • Regeneron Pharmaceuticals (REGN), up 19.7% to $29.53. The drug maker and Bayer's (BAYRY) experimental drug for wet age-related macular degeneration, a cause of vision loss in the elderly, worked as well as Roche Holding's (RHHBY) Lucentis with fewer doses. Bayer was off 1.4% to $77.90 in New York; Roche dropped 1.4% to $36.25.
  • SanDisk (SNDK), up 6.5% to $42.57, second-best among S&P 500 stocks. The biggest maker of flash-memory cards was increased to "outperform" from "neutral" by Robert W. Baird.
Short hits from the markets -- New York close
 
  Mon.

Fri.

Month chg.

YTD chg.
Treasury yields




 





13-week Treasury bill

0.130%

0.130%

8.33%

160.00%
5-year Treasury note 

1.433%

1.512%

21.54%

-46.65%
10-year Treasury note

2.813%

2.895%

7.70%

-26.80%
30-year Treasury bond

4.209%

4.255%

5.23%

-9.13%
Currencies







 

 
U.S. Dollar Index

78.768

78.594

1.69%

0.70%
British pound

$1.5957

$1.5964

-0.61%

-1.36%
(in U.S. $)











U.S. $ in pounds

£0.6267

£0.6264

0.61%

1.37%
Euro in dollars

$1.3615

$1.3630

-2.49%

-5.01%
(in U.S. $)











U.S. $ in euros

€ 0.7345

€ 0.7337

2.56%

5.27%
U.S. $ in yen 

83.47

83.26

3.17%

-10.24%
U.S. $ in Chinese

6.67

6.64

-0.39%

-2.31%
yuan











Canada dollar

$0.982

$0.982

-0.11%

3.23%
(in U.S. $)











U.S. dollar 

$1.019

$1.018

0.11%

-3.13%
(in Canadian $)











Commodities

 

 

 

 
Gold

$1,357.80

$1,352.30

0.01%

23.86%
(per troy ounce)











Copper

$3.7515

$3.8335

0.48%

12.10%
(per pound)











Silver

$27.4610

$27.1790

11.79%

63.02%
(per troy ounce)











Wheat 

$6.4550

$6.4450

-10.00%

19.21%
(per bushel)











Corn

$5.1525

$5.4175

-11.47%

24.31%
(per bushel)











Crude oil 

$81.74

$81.98

0.38%

3.00%
(per barrel)










 


24Comments
Nov 22, 2010 4:49PM
avatar

Do not worry about Ireland, a few days ago it was China,  the stock market  should not be influenced by

this ....  again, day traders love this stuff to buy stocks low and sell when market goes back up tomorrow.  Lets keep the market going strong and we all gain in the long run for our retirement investments.  Get sick and tired of this manipulation. The USA is economy is improving ..  yea we took a hit by greed from the banks and the mortgage companies, but President Obama has put in some stop gap measures so hopefully the greed and flipping homes and mortgage scams will be prevented in the future. Yes, I am sorry for the foreclosures that happened to the innocent, but, but maybe renting will be best for them. We all took a hit with the home values that dropped because of the foreclosures that are on the market.  That too will pass as they are bought up or maybe rented out to the ones that unfortunately loss there home from other reasons such as job loss or by maybe taking out a mortgage they could not have afforded in the first place. 

Nov 22, 2010 10:19PM
avatar

Eye-rolling  while i do admire your optimism gitterdone, imho you are simply not facing the realities or the enormity of the "new normal" we have brought upon ourselves.  you cannot send a canoe up against a nuclear aircraft carrier and expect to nudge her bank on course no matter how optimistic or gung-ho the paddlers.

 

it might help if you visit www .usdebtclock . org and just spend some time considering the enormity of the $13.8 TRILLION US national debt, how quickly it is rising, the amount owed by each individual taxpayer, the steadily declining numbers of taxpayers, and then switch over to contemplate the $111.4 TRILLION in unfunded entitlement obligations.  we are a giant junk bond and will soon face, voluntarily or involuntarily, many of the same issues confronting these euros.  this is going to be a long, drawn out battle of epic proportions so best to hunker down and adjust the old mindset. BUT keep your chin up as always since we should ultimately prevail once citizens are forcibly dragged back into the realities of debt budgets and mathematical reality.

 

like it or not, at the end of the day two plus two equals four.

Nov 22, 2010 7:14PM
avatar

all i want for x=mas is for the bush adminatration to all be "waterboarded" give them morons a good doze of their own corupt medicine......... as the airhead former gov. of alaska would say, YOU BETCHA!!!!!!!!!!!!!!!Party

Nov 23, 2010 6:20PM
avatar
Anyone who thinks things are getting better or thinks they will be getting better is either a millionare or a real butt slammer!!!!
Nov 23, 2010 9:34AM
avatar
Throw the Goldman Sachs  C.S.'ers  in the can.  Angry
Nov 23, 2010 7:27AM
avatar
Better yet, let's have the whole world go BOOM at once. Ah, peace at last with beautiful souds of silence! Sleeping half-moon
Nov 23, 2010 4:36AM
avatar
Thumbs upRed heartThumbs up  one of the best, most insightful posts of all time.  this process is exactly what will create jobs by moving us back into an export economy.  see the article on the big companies that will need to flee ireland as they are forced to raise corporate tax rates (come on home google, you tax evaders) and come back to the US.  cheaper dollar will help us continue to export to the countries you mention.  ((&^(*)&)(* china.
Nov 23, 2010 4:19AM
avatar
Come to think of it .if all the  printed money by US and EU goes to countries like Brazil , India  and South Africa (and not China )  it will help the world economy since all this countries have a consumption economy , their economy runs trade deficits unlike the command economy of china which accumulates the money for nefarious use rather than enriching their workers .
Nov 23, 2010 2:00AM
avatar
Stock will rise on Tuesday as HP reports better than expected earnings , Buy buy buy !
Nov 22, 2010 9:46PM
avatar
Why go to Vegas to loose money? Heck, there are 60 casinos within 400 miles of my house in the midwest. You should see all the grey haired junkets that fill the roads on the weekends to go to the casinos.
Nov 22, 2010 9:26PM
avatar
Thumbs up sage advice cantiq.  just what does happen when the last domino in that long row topples over with nothing but eu-welfare for sovereign support?  time to buy stock in the airlines that fly them all to australia.
Nov 22, 2010 9:21PM
avatar
Hot   politics does not keep gamblers from going to vegas: a lack of jobs keep gamblers from going to vegas: the tea party wants to piggyback on the party of no and withhold federal unemployment and stimulus necessary for job creation, as well as continue tax-welfare for the rich, which pulls more money out of the pockets of people who actually spend what they make:  the tea party was thus anathema for vegas.
Nov 22, 2010 9:21PM
avatar

Greece has debt. Greece goes into default. Markets crash. EU bails out Greece. Markets recover. Ireland has debt. Ireland goes into default. Markets crash. EU bails out Ireland. Markets recover. Spain has debt. Spain goes into default. Markets crash. EU bails out Spain. Markets recover. And so on.....

Where do you think the EU is getting the money to bail out the countries?

Buy low, sell high.

Nov 22, 2010 9:12PM
avatar
So the TSA gives up doing body scans. Then a jet explodes over the middle of the US. Big investigation takes place. They fine and castrate the person that missed the bomb in the plane. Big legal battle from all the people who lost relatives in plane. Government pays big bucks to all the people. (sounds like 911 to me) Then government makes new rules to further discomfort passengers on planes. Then people complain about new rules. (Start reading post over again.)
Nov 22, 2010 8:55PM
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I agree, like to see who made the big money on the 6th. Follow the money.
Nov 22, 2010 8:51PM
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Better to be felt up than blown up I always say!
Nov 22, 2010 8:49PM
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I still don't believe May 6th's drop was a trade error. They don't want to create a panic.
check out the '60' minutes show on 'robo-traders' they had a huge hand in that fiasco, 1 billion trades a second(exaggerating a bit; but shockingly close)
Nov 22, 2010 8:45PM
avatar

so who's going for the free colonoscopy they giving out at the airports this week........Martini glassSurprisedMartini glass take two of these before going and enjoy!

Nov 22, 2010 7:17PM
avatar
Why should just 1 country suffer? Let's spread the doom out evenly and equally. Welcome to a 1 world economy that so many of you fools wanted. Eye-rolling Enjoy the party! Party Jeers... um... Cheers! Martini glass
Nov 22, 2010 6:28PM
avatar
Lin Mun Poo no relation to Winnie the Pooh a Malaysia native penetrated Federal Reserve network of 10 computers in Cleveland and a host of other big stuff is in custody their getting better at this. I still don't believe May 6th's drop was a trade error. They don't want to create a panic.
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